Despite a fall in inflation, Poland’s central bank governor remains concerned it could reignite because of higher food taxes and the potential removal of energy price limits.
Poland’s central bank is expected to keep interest rates unchanged at 5.75% for the seventh consecutive meeting, a Bloomberg survey of 27 economists has revealed.
Central Bank Governor Adam Glapinski said last month that he would not cut borrowing costs, citing concerns about a potential rise in inflation because of higher food taxes and the potential removal of energy price limits.
Poland’s annual inflation rate fell in March, dropping to 1.9% from the previous month’s 2.8% and beating market expectations of 2.2%.
However, the Monetary Policy Council (MPC) highlights “substantial uncertainty” regarding inflation fluctuations, primarily influenced by fiscal and regulatory policies, as well as the pace of economic recovery and labour market conditions in Poland.
In contrast to Glapinski, Finance Minister Andrzej Domanski suggested last month that lower rates could benefit the budget and the economy. However, within the 10-member MPC, only a minority supports reintroducing rate cuts, pending confirmation that the government’s energy pricing plans won’t trigger inflation.
